Affordable Requirements and Fees to Build Could Drop in SF

San Francisco could slash fees and affordable housing requirements to get its sluggish development pipeline moving.

San Francisco Mayor London Breed and Board of Supervisors President Aaron Peskin introduced legislation this week to drop affordable housing requirements from 22 percent for rental units and 24 percent for condos to 12 percent for projects that are already approved but not moving forward, according to the San Francisco Chronicle.

For new projects proposed in the next three years, the below-market rate would be 15 percent.

The legislation would also change in-lieu fees, or what developers pay to construct the affordable housing offsite. It would drop from 30 to 33 percent of what it would cost to build them onsite to 16 percent for approved projects and 21 percent for new projects. It would also reduce other development fees by one-third for the next three years and developers would be allowed to defer fees until after construction.

The proposed legislation comes after an eight-member technical advisory committee recommended a major correction to fees and inclusionary housing percentages and city reports showed building is infeasible under the current requirements.

“It’s a huge step forward. It definitely helps to address the feasibility gap in housing right now,” Jesse Blout, a member of the committee and a founding partner of Strada Investment Group, told the Chronicle. “Is it the only thing that is necessary to really spur the type of production that we’re all hoping for? Maybe not, but it’s certainly a huge step in the right direction. And it will cause certain projects that are currently not moving forward to move forward.”

The new legislation is part of a larger push to ease development in the wake of state requirements to create 82,000 new housing units in the next eight years.

“We are fundamentally changing how we approve and build housing in San Francisco,” Breed said in a statement. “When fees are set so high that everything freezes, it halts housing and hurts our entire city. By reforming our fees and setting them based on data, we can make sure we are delivering new housing, jobs and the economic benefits we all want for our city.”

—Emily Landes